On 6 June, after two months of negotiations, Bulgarian parliament approved a coalition government led by the prime minister Nikolai Denkov. The government was supported by the two largest parliamentary factions, the anti-communist and socially conservative GERB and the alliance of the right-of-centre We Continue the Change party (WCC) and the liberal Democratic Bulgaria (DB). Under the coalition agreement, Denkov, from the WCC-DB, will serve for the first nine months; Maria Gabriel from GERB will replace him, but until then will be deputy prime minister and foreign minister. The compromise was reached following the fifth consecutive parliamentary elections on 2 April, in which GERB gained most votes (26.49%, compared 24.56% for WCC-DB), but failed to gather support to form a one-party government. The new coalition government pledged a pro-EU agenda, with joining the euro-zone and the Schengen zone as its priorities.
Published in March 2023:
Uncertainty seems to be the only predictable outcome of the April 2023 parliamentary election
Bulgaria is a country without a parliament. The legislature has been dissolved in January 2023, when President Rumen Radev called a snap poll after a repeated failure to form a government. Since then, Bulgaria has been living under a caretaker cabinet, unable to pass any laws. On 2 April 2023, Bulgarians will vote in their fifth parliamentary election in two years. The previous short-lived government headed by Kiril Petkov, the leader of the We Continue the Change party (WCC), lasted from November 2021 to June 2022, when it collapsed following a no-confidence vote.
Petkov’s “quadruple coalition” – comprising the right-of-centre WCC, the left-wing Bulgarian Socialist Party (BSP), the liberal Democratic Bulgaria (DB) and the populist There is Such a People (TISP) party of TV host Slavi Trifonov – fell after TISP withdrew from the government, ostensibly, over its failure to improve the economic situation and a dispute around a parliamentary vote to lift Bulgaria’s veto on North Macedonia’s EU accession.
A deeper political crisis
But the governmental crisis runs deeper and centres on Petkov’s anti-corruption agenda and his conflict with Bulgaria’s omnipotent prosecutor general, Ivan Geshev. Geshev is a close ally of Petkov’s main opponent, the former prime minister Boyko Borissov. Borissov, who was in office for a total of over 11 years, is also known to have close ties to Delyan Peevski, a Bulgarian oligarch who was sanctioned for corruption by the US government under the Global Magnitsky Act in 2021. In March 2022, the Bulgarian Ministry of Interior arrested Borissov on suspicion of corruption and asked the prosecutor’s office to press charges and start a proper investigation. Geshev refused to investigate Borissov, and subsequently closed the investigation into Peevsky, claiming a lack of evidence.
Trifonov and TISP then played a key role in helping Borissov’s party, GERB, and its ally, the Turkish minority Movement for Rights and Freedoms (MRF), to overthrow Petkov’s government. The subsequent inconclusive October 2022 election resulted in a hung parliament that failed to produce a working government. On 24 January 2023, President Radev called new elections.
There is little chance that the next National Assembly will fare any better in coalition building. This is because the balance of political forces in Bulgaria has not changed. Fragmentation remains the main issue, says Tihomir Bezlov, senior analyst for Sofia’s Centre for Studies of Democracy. The latest polls show only a slight difference in vote share between the anti-socialist, anti-communist and socially conservative GERB and the recently formed WCC-DB coalition – both are hovering around 25-27 percent, with one or the other leading depending on the pollster. The third political force, MRF – with a stable share of between 12 and 13 percent – has historically worked with GERB. The BSP (around 8 percent), however, is expected to resist joining any collation until the next municipal election, due in October 2023. Additionally, three smaller parties are also polling around the 4 percent required for entry to the legislature.
The most unlikely scenario at this point is a grand coalition of GERB and WCC-DB, says a former left-wing MP, who will be running in the upcoming election: “None of the parties wants to compromise and go into a coalition with an opponent, because they are afraid that this could lead to losses in the local elections.”
Bezlov agrees with this view. Despite multiple controversies attached to its leader Borissov, he says, GERB’s constituency is stable: “They have run the country for almost 12 years and control two-thirds of Bulgarian municipalities. GERB has a solid core of fans.”
WCC’s strategy, says Bezlov, is to avoid undermining its positions with voters through joining a coalition until the local elections. Its hope is to win main cities, with the aim of depriving GERB of control of urban centres and thus of the financial resources to gain an electoral advantage: “But it is a difficult and risky game, because people are losing patience, and if the liberals continue along these lines, the voters might get disenchanted, especially since WCC’s last government has not been particularly successful anyway.” The former left-wing MP also points out that the liberals’ main constituency is young Bulgarians, whose votes are not enough: many young people do not vote, while others have gone to work abroad. Moreover, polls show that Borissov remains the third-most popular politician after Radev and caretaker prime minister Galab Donev, while Petkov has a strong negative rating.
Economic stagnation, endemic corruption
The prospect of continuing political paralysis bodes poorly for Bulgaria’s investment climate. The country’s FDI flows for 2022 were EUR 2.25 billion – an improvement on 2021’s EUR 1.21 billion, but flat on the EUR 2.27 billion in 2020. Political instability is not the only factor; the former left-wing MP noted that Bulgaria’s stagnant GDP was also down to objective factors, such as the small size of its labour and consumer market, and the fact that the most attractive investment projects were implemented during the period of privatisation in the late 1990s-early 2000s.
However, corruption also remains the key impediment to the country’s progress. Bulgaria ranks 72nd out of 180 countries in Transparency International’s (TI) Corruption Perception Index for 2022, with a score of 43 – the second worst in the EU, ahead only of Hungary. TI states that “vested corporate interests have established strong oligarchic influence” in Bulgaria, pointing to significant problems with the rule of law, which led the Council of Europe to put the country under special supervision in 2022 due to weaknesses in the judiciary.
The US State Department’s 2022 Investment Climate Report noted some progress in addressing petty corruption through the gradual introduction of technologies in public administration, including e-filings and the electronic issuance of certificates. However, according to the report, “high-level corruption, particularly in public procurement, remains a serious concern. The high-profile prosecutions that do take place are often seen as selective or politically motivated and typically end in acquittals after a lengthy judicial process.” The report stated that the “lack of serious convictions against senior officials and the need for reforms in the criminal justice sector remained high on the public agenda”, but the Petkov-led governing coalition was unable to pass the anti-corruption legislation required to build capacity and secure final convictions for public corruption.
Sanctions and the Russian factor
Notably, in February 2023, the US and UK sanctioned eight Bulgarians for alleged corruption, including the country’s wealthiest man and a former minister. Washington sanctioned five former Bulgarian officials. They included former BSP energy minister and lawmaker Roman Ovcharov, who allegedly profited illegally from deals involving Bulgaria’s only nuclear power plant and Russian energy firms, and GERB member Vladislav Goranov, a former finance minister in Borissov’s third cabinet. The UK banned entry and imposed asset freezes on three other Bulgarians – all designated by the US in 2021 – including Peevski and Vasil Bozhkov, the country’s wealthiest man, who has been described in the press as a “gambling tzar”. The US Treasury said that Goranov was sanctioned for a scheme in which tens of millions of euros in bribes were paid to Bulgarian officials in exchange for legislation favouring the gambling industry.
Will this new round of corruption-linked sanctions have any impact on the upcoming election? Emerging Market Watch, a Bulgaria-based emerging market specialist, said it expected that the sanctions – which have hit both GERB and BSP – would be used by the WCC-DB coalition to position itself in the election campaign as a force that would work to complete the justice reform and fight corruption (source: Emerging Market Watch Daily Report, 15 February 2023). Yet the former left-wing MP thinks that the sanctions are unlikely to significantly affect support for GERB and BSP among their core electorate. Support for GERB, said the publication, had not been dented by corruption scandals around Borissov, while BSP voters, who are traditionally pro-Russian, are unlikely to be concerned about the allegations against Ovcharov over deals with Russian energy firms.
Yet while supporters of Russia dominate the BSP and Revival, a small nationalist party with an anti-EU and anti-American agenda, the Bulgarians’ overall attitude towards Russia has undergone a serious change. According to a May 2022 study by Globsec, an international security think tank, the proportion of Bulgarians who view Russia as a strategic partner had decreased from 45 percent in 2021 to 30 percent by March 2022. The share of respondents who viewed Russia’s President Vladimir Putin positively plummeted from 70 percent to 29 percent over the same period. Revelations that Bulgaria was discreetly assisting Ukraine with weapons and fuel early in the war and the December 2022 approval of military aid to Ukraine only confirmed that the influence of pro-Russian forces in the country had diminished.
Almost 30,000 Russian passport holders lived in Bulgaria in 2021, and this number is believed to have increased since the war in Ukraine. And Bulgarians continue to love Russia for historical reasons, says the former left-wing MP. Nevertheless, he adds that “loving Russia is not the same as voting for pro-Russian parties”. Bezlov agrees, pointing out that over the last year, Bulgaria has managed to wean itself off Russian gas, while its economy is almost fully dominated by European capital and 95 percent of its exports are to the EU or third countries. Bezlov says that the pro-Russian sentiment is still strong in the Bulgarian army and its intelligence services, but stresses that both institutions do not have the same clout in Bulgaria as in the past: “Russia no longer has the same channels to influence politics”.
But while the Russia factor may have reduced, uncertainty about the composition of the future parliament and its effectiveness persists, potentially jeopardising the next key milestone in Bulgaria’s relationship with the EU – the adoption of the euro. This is scheduled for 1 January 2024, but widely expected to be delayed at least until mid-2024. And that, says Bezlov, is the optimistic view. For the time being, it is a waiting game for Bulgaria, and for its much hoped-for anti-corruption reforms.
Vlada Tkach, March and June 2023